- International Gold Standard

- the gold standard was an international standard - determining the value of a country's currency in terms of other countries currencies. Because adherents to the standard maintained a fixed price for gold, rates of exchange between currencies tied to gold were necessarily fixed.
- Because exchange rates were fixed, the gold standard caused price levels around the world to move together.
- the fixed exchange rate also caused both monetary and nonmonetary (real) shocks to be transmitted via flows of gold and capital between countries. Therefore, a shock in one country affected the domestic money supply, expenditure, price level, and real income in another country.